Revenue Split Models

Independent Team Payouts

Local Independent Firms are a fast-growing segment of the industry, offering a best of both worlds to Advisors who desire independence without having to manage every aspect of their business. These come in all shapes and sizes, whether you are a planning focused Advisor, a portfolio manager, or even an insurance specialist. Teaming up with a local organization with the right members can fast track your business to much higher levels than employee roles, without the headaches of being a lone wolf solo practitioner.

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Net Payouts

Joining a team of like-minded independent Advisors can be a best of both worlds, marrying the independence to run your practice as you see fit with a higher revenue share, but without the total responsibility of running the parts of the business you don’t want.

Most tuck-in Firms offer Advisors a payout in the 60 - 80 percent range, depending on the types of resources you will have at your disposal. You are seen publicly as a part of a team, sharing a website, office space, technology and marketing efforts. But your piece of the business is yours to manage as you wish, within the capabilities of your Firm.

A key consideration for independent team members should be the “true net” payout. Many Firms may offer a high topline payout, but charge many of the business costs back to the Advisor. Others may offer an all-inclusive payout that covers everything from rent to paperclips.

As you evaluate Firms in this model, your decision will start to be less about the economics and more about the capabilities and potential of the partnership. Afterall, you will own your practice and be building equity in your own business. 72 percent vs 75 percent doesn’t matter as much when compared to the environment that will help you build the higher enterprise value of your practice.

Other Considerations

It’s never just about the money. Well, maybe it is. But it’s not just about the payout. Explore other considerations and how they can impact the overall net income of the Advisor.

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  • You will be working as a part of a team, each growing together and for themselves as individuals. A strong cultural environment can fuse bonds and partnerships that fuel each other, the 2+2=5 effect.

  • The management structure of the Firm will be important to evaluate as you decide on the right team. While each producer works for themselves, Firms will have a Managing Partner and key leadership pieces in various roles guiding the overall group. You will need to have a strong overlap in visions to produce the most fruitful partnership.

  • The staff behind the scenes will play a key role, especially during the transition of your business. This applies to the local level with your office staff, but also with the supporting broker/dealer or custodian managing client assets. You will want to make sure these pieces will be able to meet the needs of your clients as well.

  • You will own your piece of the pie contractually, so that part is easy. But many Tuck-In Firms also offer their top Advisors equity in the overall Firm as well. An equity stake in a Firm that can keep pace or even outgrow your own growth rate can greatly accelerate your net economic benefit of the transition.